T-Jat Systems 2006 Ltd. v. Amdocs Software Systems Limited, 13 Civ. 5356 (S.D.N.Y. Dec. 9, 2013) [click for opinion]
T-Jat Systems 2006 Ltd. sued a number of affiliated entities in the Southern District of New York for violating a software licensing and services agreement and a confidentiality and non-disclosure agreement. The entities successfully compelled arbitration pursuant to an arbitration clause in the agreements. After the arbitration began,, one of the entities, Amdocs, filed suit in Israel against T-Jat's minority shareholding company and two of T-Jat's principals and co-founders. Amdocs asserted tort claims on the grounds that the U.S. lawsuit was frivolous and filed in bad faith. In response, T-Jat filed a motion in the Southern District seeking an anti-suit injunction of the Israeli action.
Two threshold requirements must be met before a court will grant an anti-suit injunction: (1) the parties in both actions must be the same; and (2) the resolution of the case before the enjoining court must be dispositive of the action to be enjoined. Although T-Jat was not named in the Israeli lawsuit, the court noted that "substantial similarity and affiliation" between the parties, rather than complete identity, was sufficient—particularly because the Israeli defendants were sued for causing T-Jat to bring the U.S. lawsuit, and because the Israeli complaint treated the Israeli defendants and T-Jat as essentially the same.
As to the second element, the court explained that in cases like this one that involve the court's decision to compel arbitration, the key question is whether the claims in the foreign lawsuit must be arbitrated pursuant to the parties' arbitration agreement. Here, the arbitration clause, which covered "all other disputes arising under or in connection with the parties' licensing agreement," was broad enough to include the claims in the Israeli action.
The court rejected Amdocs's assertion that because the Israeli defendants were not signatories to the arbitration agreement the claims against them were not subject to arbitration. After all, the Israeli defendants had consented to arbitration and Amdocs had treated T-Jat and the Israeli defendants as interchangeable.
Equitable considerations also supported the anti-suit injunction. To allow the Israeli action to proceed in the face of the compelled arbitration, the court reasoned, would undermine the court's jurisdiction to enforce the arbitration and would frustrate the U.S. policy favoring arbitration. In addition, the court found the Israeli action "vexatious" as it created parallel lawsuits, which ran the risk of conflicting judgments. For these reasons, the court granted the anti-suit injunction.